Under the exhaustion rule, which statement is generally correct?

• A. Creditors may seize partner assets before partnership assets.
• B. Creditor must generally pursue partnership assets before partner assets.
• C. Creditors have unlimited access to both partnership and partner assets.
• D. The rule applies only to partnerships.

Answer: (B)

The main idea is that creditors must first use the partnership’s own assets to satisfy a partnership debt before turning to the personal assets of the partners. This reflects that a partnership is a separate entity with its own pool of resources, and partners are liable for partnership debts but their personal resources aren’t the initial target. If the partnership assets aren’t enough to cover the debt, creditors may then pursue the partners’ personal assets, given the general liability structure of partnerships.

So, the statement that creditors must generally pursue partnership assets before partner assets best captures this rule. The other statements conflict with that priority: seizing partner assets first would bypass the partnership’s asset pool, and claiming unlimited access to both sets of assets misstates the ordered recourse. The rule is about how debts of the partnership are collected, not a blanket rule applying to all business forms.